Days before jury trial in federal court in criminal case

The U.S. Department of the Treasury Financial Crimes Enforcement Network, commonly known as FinCEN, has assessed a civil penalty in the amount of $75 million against the owner of Tinian Dynasty Hotel and Casino for “willful and egregious violations” of the Bank Secrecy Act.

When asked to comment, Tinian Dynasty general manager Christopher Bishop told Saipan Tribune that he learned about it only yesterday morning and that they have no comment.

Bishop said he already discussed the matter with their counsel, Bruce Berline.

Hong Kong Entertainment is facing criminal charges on the same issue. The trial will commence on Tuesday in the U.S. District Court for the NMI.

Bishop also refused to comment when asked how the $75 million fine will affect the trial.

In a statement yesterday, Calvery said that Tinian Dynasty didn’t just fail to file a few reports but the casino operated for years without an anti-money laundering program in place.

Calvery said Tinian Dynasty failed to file thousands of currency transaction reports, or CTRs, and its management willfully facilitated suspicious transactions and even provided helpful hints for skirting and avoiding the laws in the U.S. and overseas.

“Tinian Dynasty’s actions presented a real threat to the financial integrity of the region and the U.S. financial system,” the director said.

FinCEN has the authority to investigate casinos for compliance with and violation of the Bank Secrecy Act, or BSA.

In her determinations yesterday, Calvery said Tinian Dynasty willfully violated the BSA’s program and reporting requirements from 2008 up to the present.

Calvery said Tinian Dynasty failed to develop and implement an anti-money laundering program, failed to report transactions involving currency in amounts greater than $10,000, and failed to detect and adequately report suspicious activities and transactions in a timely manner.

The BSA and its implementing regulations require casinos to develop and implement written anti-money laundering programs that are designed to assure and monitor compliance with the BSA.

Calvery said no member of the Tinian Dynasty staff was delegated responsibility for day-to-day compliance with the BSA, and the casino failed to develop and implement policies, procedures, and internal controls to ensure compliance with the BSA.

She noted that Tinian Dynasty never conducted any independent testing of the casino’s systems to ensure compliance and did not have sufficient procedures in place to detect or report suspicious transactions.

Further, the director said, casino personnel were not trained in BSA recordkeeping requirements or in identifying, monitoring, and reporting suspicious activity.

She said Tinian Dynasty’s failure to develop and implement an anti-money laundering program contributed to its willful failure to file CTRs at the request of undercover Internal Revenue Service agents posing as Russian businessmen.

Calvery pointed out that the casino’s failure to develop and implement an anti-money laundering compliance program also contributed to its willful failure to file CTRs on other transactions for nearly four years.

Calvery cited that during an April 29, 2013, search conducted at Tinian Dynasty, law enforcement agents discovered a stack of more than 2,000 unfiled CTRs.

When asked about these CTRs, Calvery said, the casino’s chief auditor advised that he assumed that filing them was a low priority because nobody ever noticed that they were not being filed.

Calvery said from at least May 3, 2012, through March 4, 2013, Tinian Dynasty engaged in a pattern of accommodating gamblers who desired to conduct transactions with large amounts of cash without the casino reporting their transactions.

She said during a criminal investigation, undercover agents, posing as casino patrons, told Tinian Dynasty’s casino manager and its VIP services manager that they planned to gamble large amounts of money and expressly requested that the casino not report their gaming transactions to the government.

The director said that, on May 3, 2012, the VIP manager assured an undercover agent posing as the New York-based representative of a Russian businessman that his client could bring large amounts of currency and that the casino would not file reports related to the client’s activity at the casino.

She said when two other undercover agents arrived at the casino on Feb. 8, 2013, the VIP manager and other casino employees assisted them with eight transactions, each of which required the filing of a CTR. The total amount involved in the eight transactions was $510,130.

FinCEN has identified more than 2,000 CTRs that the casino failed to file between Jan. 1, 2009, and April 22, 2013.

Calvery said before being indicted for BSA violations in May 2013, Tinian Dynasty had never filed a single suspicious activity report.

On Monday, U.S. District Court for the NMI Chief Judge Ramona V. Manglona ruled that the U.S. Congress has given the U.S. Department of the Treasury Secretary the authority to regulate casinos in the CNMI.

Manglona said because Treasury has been duly authorized by Congress under a statute to expand the definition of the United States to include the CNMI, and because Treasury has promulgated regulations consistent with that authority, it has the authority to enact regulations to prevent money laundering by casinos licensed in the CNMI.

Manglona discussed the Treasury Secretary’s authority in her order that denied Hong Kong Entertainment’ motion to dismiss the indictment against the company for lack of federal jurisdiction and failure to state an offense.

The U.S. government filed in November last year 158 criminal charges against HKE.

The charges are one count of conspiracy to cause a financial institution to fail to file a CTR, 155 counts of failure to file a CTR, one count of failure to file a suspicious activity report, and one count of failure to maintain an effective anti-money laundering program. The indictment has also a notice of forfeiture.

HKE, through counsel Berline, has moved to dismiss the indictment on grounds that it was not obligated to file CTRs because Congress has not given Treasury the authority to regulate casinos in the CNMI.

Assistant U.S. attorneys Marivic P. David and Ross K. Naughton have stated that the parties are awaiting a final decision from the Department of Justice relating to a proposed settlement, which if approved, will resolve the need for a jury trial.

The trial was re-set several times following the parties’ request to postpone because the U.S. Department of Justice’s Main Justice in Washington, D.C. has yet to issue a final decision regarding the settlement deal that the U.S. Attorney’s Office and HKE have agreed to in principle to dismiss the criminal case.

The parties agreed to dismiss the case against HKE in exchange for the company’s forfeiture to the U.S. government of $3.02 million, plus other terms and conditions.

The trial was supposed to commence last Feb. 9, but the judge postponed it to April 7, then June 9, 2015, upon the parties’ request.

Ferdie De La Torre | Reporter

Ferdie Ponce de la Torre is a veteran journalist who has covered all news beats in the CNMI. Born in Lilo-an, Cebu City in the Philippines, De la Torre graduated from the University of Santo Tomas with a bachelor’s degree in journalism. He is a recipient of many commendations and awards, including the CNMI Judiciary’s prestigious Justice Award for his over 10 years of reporting on the judiciary’s proceedings and decisions. Contact him at ferdie_delatorre@saipantribune.com

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